US data: EIA says ethanol production falls sharply, but stocks show large build

Source: By EIA • Posted: Sunday, January 26, 2020

Houston — US ethanol production averaged 1.049 million b/d for the week ended January 17, a 46,000 b/d decrease compared with the previous week but still up 18,000 b/d year on year, Energy Information Administration data showed Thursday.

 Production was below market expectation and follows a seven-month high the previous week.

Overproduction combined with seasonally low demand has pushed ethanol prices lower in recent weeks, according to market sources. While the EIA’s reported decline in production is substantial, it may not be enough to slow the fall in prices. One source said that production above 1.010 million b/d will continue to impact prices.

Total stocks added 1.025 million barrels last week to finish with 24.031 million barrels, the second build of more than 1 million barrels in the last three weeks. The rise in inventory was substantially above market expectations.

Three of the five defined regions increased inventories last week. East Coast stocks led all gains, adding 556,000 barrels to end the week with 8.052 million barrels.

Gulf Coast stocks gained 349,000 barrels, or 8.1%, to 4.669 million barrels. The Gulf Coast is the origin for most ethanol exports from the US, as well as a large consumption hub.

Midwest stocks added 225,000 barrels to 8.228 million barrels. The Midwest is the home to most of the country’s ethanol plants, and is a dominant hub for trading the biofuel.

The West Coast region dropped 87,000 barrels, or 0.9%, to 2.774 million barrels, as the EIA reported no imports into the US. Ethanol imports typically flow into California, as imported sugarcane-based ethanol from Brazil generates more value from carbon credits under the state’s Low Carbon Fuel Standard.

The four-week rolling average of the refiner and blender net ethanol input fell 18,000 b/d to 851,000 b/d, while the weekly average rose 10,000 b/d to 864,000 b/d.

The four-week rolling average of gasoline demand, represented by product supplied, fell 160,000 b/d to 8.579 million b/d, while the weekly average rose 74,000 b/d to 8.662 million b/d.

The four-week rolling average of the ethanol blending rate, calculated by dividing the refiner and blender ethanol input by gasoline demand, fell to 9.92% from 9.94%.